It has become market practice for lenders to include wording in facility agreements that provides that the applicable IBOR (interbank offered rate) shall never be less than zero (a zero floor). But what happens if the transaction includes a corresponding interest rate swap (IRS)? Could the inclusion of a zero floor result in mismatches with rates payable under the swap?
FASB Changes: Commodities Hedge Accounting
The new hedge accounting guidance recently issued will better align the accounting for commodity hedges wit...
Looking for help with your next hedge?Talk with Chatham
Other content in this Area
The True Cost of Hedging
Ensuring an effective, compliant hedging program means assessing both visible and hidden costs across all hedging activities, including strategy and pricing, legal and regulatory, and accounting.
Semi-Annual Market Update
In this installment of Chatham’s semi-annual market update webinar series, we will examine current market conditions, drivers, and indicators, as well as communications from the Fed, and more.
Considerations for LIBOR Alternatives in Loan Documentation
Chatham Financial covers some of the issues that should be considered as market participants prepare for the unavailability of LIBOR and the resulting impact on loans and derivatives.
REITs Should Prepare for Likely Transition from LIBOR
Gavin Duckworth, director of hedging and capital markets at Chatham Financial, participated in a video interview at REITwise 2018, Nareit’s Law, Accounting & Finance Conference in Hollywood, Florida.
Treasurers: What Your Team Needs from a Treasury Risk Management System
Treasurers, whether you know it or not, your team is beset with dangers. They are already a lean team doing more than their fair share of work, managing cash and risk and other important missions.
What Your Accountants Need from a Treasury Risk System
If you are in the process of researching treasury systems for your team, you are likely spending time considering what your accountants need.
What to do about rising interest rates?
Many companies are using derivatives to address the impact of rising interest rates on their business.
Learning Curve: The Promise and Perils of Deal-Contingent Hedging
Deal-contingent hedging can be a great way to hedge risks associated with mergers and acquisitions, but a number of pitfalls can flummox first time users of these specialist derivatives.
FX Risk: Break the Cycle of “Just Keeping Up”
Working on a lean treasury team can be a difficult job. The large number of areas that have to be covered and the amount of information that needs to be gathered, analyzed and understood is daunting.
A Vine Copula–GARCH Approach to Corporate Exposure Management
Our results suggest that, while more traditional models may be adequate to capture either tail behavior or dependence adequately for a given portfolio at a given time, vine–GARCH models more...
The State of Play on Derivatives Regulation
The State of Play on Derivatives Regulation Now more than a year since a new Presidential administration took residence on Pennsylvania Avenue, consequential changes to derivatives laws are...
Increase Your FX Penetration and Better Serve Customers
About 95% of bank accounts outside the US are denominated in some currency other than USD. Yet the percentage of wires going to international destinations in a foreign currency is in single digits.
A Practical Guide to Using Receive-Fixed Interest Rate Swaps to Reduce Asset-Sensitivity
Banks use several techniques to convert some of their asset-sensitivity to current period earnings. Traditional non-derivative approaches take time and can create capital implications for the bank.
Derivatives: Deal-contingent Hedgers Set Sights on Infrastructure
Derivatives: Deal-contingent hedgers set sights on infrastructure January 3, 2018 “There is a complication,” says Conly. “It is one thing if the hedge is for a standard sale and purchase...
Analyzing FX Exposures to Understand Risk
The three common questions companies have to answer when analyzing and mitigating FX risk
Loan Level Hedging Programs Under the Volcker Rule
Regulators have indicated that a financial institution desiring to conform its loan level hedging program to a permitted form of proprietary trading should pursue the market making exemption.
NeuGroup FXMPG Summit 2018
NeuGroup FX Summit, hosted by Chatham Financial, discussed new hedge accounting policies and FX management implications of U.S. tax reform.
Crypto Token Financial Risk Management: Analogy
Looking at bitcoin through the historical view of traditional commodity markets.
A Return to Emotional Hedging?
We Philadelphia sports fans are a long-suffering lot. Our Flyers last won the NHL title in 1975, so long ago that it was the last Stanley Cup-winning team composed...
Compete for Long-Term Fixed-Rate Deals. Manage Interest Rate Risk. Earn Fee Income.